Weathering the COVID-19 storm: should you pivot?

MarketFinance April 17, 2020Comments Off on Weathering the COVID-19 storm: should you pivot?

All kinds of businesses have been hit hard by the coronavirus pandemic and it’s likely that you’re facing a significant drop in revenue. As social distancing looks set to continue in some shape for months to come, you may be considering pivoting in the short term. But is it a good idea?

While there are plenty of success stories that have been born out of pivoting. Starbucks, for example, actually started out as a business that sold coffee beans and equipment before deciding to to switch to a European ‘coffee house’ model. But, there are also lots of stories of businesses that took a wrong turn.

It’s crucial to know how far you should go in changing your business model to avoid wasting time, effort and money. Don’t rush through a pivot too quickly without enough thought about where you’re going after the crisis. You may wind up hitting another, bigger roadblock in a few months.

Am I thinking clearly?

In a crisis, we often respond more rashly or abruptly as we have less time to consider our options carefully. Just because everyone else is pivoting doesn’t necessarily mean it makes sense for your business. Undoubtedly, situations like this bring on new unforeseen opportunities but this is also a risky time to uproot your foundations.

Ask yourself if pivoting is absolutely necessary for your survival. Have you exhausted all your other options? Are there finance solutions available that offer an easier fix? Completely changing your business strategy is a huge disruptor, and one that may cost you more in the long run. Think about the investment you need to fund your pivot. Is the money and time worth it for a short-term fix?

What factors should I consider if I want to pivot?

You need to do all you can to drive revenue to weather the storm, but are the changes you want make easy to action in the short-term and possible to undo in the future? Think ahead, not just for now. Of course you need to do whatever it takes to keep your business liquid today, but don’t stop thinking about the business you want to be running in 6 months’ time.

Lots of companies have had to change their business models to meet new and unexpected demand in the market. Even major brands like Nike and Gap have repurposed their factories to produce PPE for hospitals.

Manufacturing is possibly the most obvious industry that can adapt its direction of business at the moment, but every industry needs to consider the same key questions about demand and competition. Even if the pivot you’re considering is to join COVID-19 response efforts, consider whether the decision may ultimately jeopardise the solvency of your business and, in doing so, the livelihood of your staff.

Think about the market you’re selling to and your new customer base, and ask yourself if there’s genuine demand or need for your adapted offering. Be realistic about how much it’ll cost to change your product or the way you offer your services. If you can move quickly and seamlessly, go for it, but investing too much may backfire if you’re not matching relevant demand.

Am I pivoting to survive now or to adapt to the future?

We don’t know what the post-pandemic world will look like or when it will arrive. As we go further into lockdown, ask yourself what we’re learning as a nation, and what habits are likely to survive. There’s been a huge shift to digital that many companies in every industry are now embracing. Being as accessible online as possible is necessary to survival when our interaction with the built environment has changed so significantly. What else will change and how can you meet new expectations?

This is an opportunity to reimagine the business landscape, so research and try to model a variety of outcomes. Think about what world we’re going into and consider how to keep your business relevant. But don’t be too quick to create fundamental change. Pivoting might seem unavoidable now to get your business through the crisis, but be wary of sustained change in a future that is too difficult to predict.

COVID-19 is a catalyst for pivots, but don’t just follow the herd

While pivoting can work, it should still be approached with care. Know you’ve exhausted all other possible solutions in your existing business model, and research carefully before you commit to drastic changes.

Companies are adapting quickly to change and are redesigning their products or services to respond to new demands. If it seems like a necessary change to get you through this pandemic and an easy fix to undo after if needed, then go ahead. But there’s no harm in waiting this out to make sure a more permanent solution is the right one – you may be grateful you held tight.

Click here more information, advice and resources to help you weather the COVID-19 storm.